UK's FTSE 100 rises against weaker pound; BATS gains

© Reuters. FILE PHOTO: A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain, August 24, 2015. REUTERS/Suzanne Plunkett/File Photo/File Photo

By Ankika Biswas and Shashwat Chauhan

(Reuters) -British equities edged higher on Tuesday as the exporter-oriented FTSE 100 rose against a softer pound, while shares of British American Tobacco (LON:BATS) advanced after the cigarette maker stuck to its annual forecasts.

The FTSE 100 index gained 0.4% as the pound slipped after data showed that British house-building wilted in May and the dollar found footing. [GBP/]

A survey showed activity in Britain's construction sector increased in April but growth was lopsided, with residential house-building suffering its steepest decline since May 2020, weighed down by weaker demand and higher mortgage rates.

UK construction and materials firms lost 0.6%.

"The UK economy has so far proven to be more resilient than many of the forecasts from last year," said Victoria Scholar, head of investment at interactive investor.

"But inflation remains stubbornly high, suggesting there's more work needed from the Bank of England to tame inflation."

British American Tobacco gained 1.5% after the Lucky Strike cigarette maker maintained its annual revenue and profit forecasts, however adding that performance would be weighted towards the second half.

Bank stocks rose 1% as Standard Chartered (LON:STAN) advanced 1.9%. A media report stated that Saudi public investment fund-owned AviLease is in advanced talks to buy the British banker's aviation finance business.

On the downside, energy stocks shed 0.5%, tracking lower crude oil prices. [O/R]

The domestically focused FTSE 250 midcap index added 0.5%, boosted by a 9.4% gain in Paragon Banking Group after it upgraded its annual net interest margin outlook and buyback target.

British defence contractor Chemring jumped 9.1% after it reported higher order intake in the first half of the year.

UK stocks have encountered volatility recently as concerns about a global economic slowdown and uncertainty surrounding further interest rate hikes by the Bank of England continued to weigh on investor sentiment.